Taiwan stocks fell 2.72 percent on Monday to a near two-week closing low, hurt by a sell-off of major financial holding firms such as Cathay Financial on fears that some banks might be involved in possible money laundering by former president Chen Shui-bian and his family.
The main TAIEX share index closed down 195.76 points at 7,000.74, the lowest finish since August 5, bucking a generally positive day on Wall Street that saw the S&P 500 rise 0.41 percent. Cathay Financial, the island's largest financial holding firm, fell 3.48 percent and smaller rival Taishin Financial fell by its daily 7 percent limit, dragging the financial sub-index down 4.83 percent.
The fall came amid a money laundering investigation involving the former president Chen Shui-bian and his family members. "The corruption case hit the financial shares," said Nigel Lee, a portfolio manager of National Investment Trust Co Ltd. "But the impact should be short-lived as the news will only temporarily affect investors' confidence, not the fundamentals of these companies."
Lee expected the TAIEX to trade between 7,000-7,200 points this week. Hon Hai Precision, top electronics parts maker, fell 4.76 percent after its subsidiary Foxconn International Holdings Ltd said it expects unaudited net profits for the six months to June 30, 2008 to "show a significant decline" from a year ago. On Monday, shares of Foxconn International, the world's largest contract cell phone maker, extended losses to fall almost 20 percent.
Acer, the world's No 3 PC seller, fell 3.09 percent and the computer sub-index lost 2.14 percent even after a newspaper reported Intel's upcoming release of its Nehalem processor and Capella notebook PC platform could benefit Taiwan's PC industry by generating new demand. The electronics sub-index fell 2.03 percent.
VIA Technologies rose 4.9 percent after a newspaper report that its unit VIA Telecom had teamed with China's BYD to enter Nokia's supply chain for low-cost handsets. ProMOS Technologies rose 2.16 percent after its South Korean rival memory chip maker Hynix said on Friday it had agreed to buy a smaller stake in ProMOS Technologies.
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